DIGITAL INNOVATION & ENTREPRENEURSHIP READINGS
DIGITAL INNOVATION & ENTREPRENEURSHIP READINGS 1
Chapter 1: Today 2
Chapter 7: Openness 3
Nabisan: “Digital entrepreneurship: towards a digital technology perspective of entrepreneurship” 4
Sahut: “The age of digital entrepreneurship” 6
Week 2: 8
Chapter 2: Network Effects - The Power of the Platform 8
Alstyne & Parker: “Digital Transformation Changes How Companies Create Value” 12
Gans & Stern: “Multiple Paths to Value: Test Two, Choose One” 13
Week 3 16
Chapter 3: Architecture: Principles for Designing a Successful Platform 16
Chapter 5: Launch - Chicken or egg? 8 ways to launch a successful platform 20
Chapter 6: Monetization - Capturing the Value Created by Network Effects 24
Kretschmer et al.: “Platform ecosystems as meta-organizations: Implications for platform strategies”
28
Week 5 30
Bourdeau: “Competing on freemium: Digital competition with network effects” 30
Cusumano: “The future of platforms” 33
Liptak: “Supreme Court Blocks Texas Law Regulating Social Media Platforms” 36
Van Alstyne: “The Rising Risk of Platform Regulation” 36
Suarez: “Dethroning an Established Platform” 37
Van Alstyne: “Pipelines, platforms, and the new rules of strategy” 38
Yu: “For Some Platforms, network effects are no match for local know-how” 40
Zhu: “Why some platforms thrive and others don’t” 41
Week 6 42
Chalmers et al.: “Artificial Intelligence and Entrepreneurship: Implications for Venture Creation in
the Fourth Industrial Revolution” 42
Gregory et al.: “The Role of Artificial Intelligence and Data Network Effects for Creating User
Value” 48
Levine & Jain: “How Network Effects Make AI Smarter” 53
Kircher: “OMG! What will happen when A.I. makes Buzzfeed Quizzes?” 54
Smith: “How TikTok Reads Your Mind” 54
Week 7 55
Agrawal et al.: “Chat GPT and How AI Disrupts Industries” 55
Baxter & Schlesinger: “Managing the Risks of Generative AI” 55
Cromwell et al.: “Discovering where ChatGPT can create value for your company” 57
Gibney: “Open-source language AI challenges Big Tech’s models” 59
Mollick: “ChatGPT is a tipping point for AI” 59
Mollic & Euchner: “The transformative potential of generative AI” 60
1
, Mollick & Mollick: “Using AI to implement effective teaching strategies in classrooms: five
strategies, including prompts” 62
Mollick & Mollick: “Assigning AI: 7 approaches for students with prompts” 64
Chapter 1: Today
- Markets change into a new platform business model that uses technology to connect organizations
through the power of the platform
- The platform radically changes the society at large as well as the economy
- The disruptive power of platforms is transformative in many different fields
- ⇒ the platform revolution
- Platform = a business based on enabling value-creating interactions between external producers
and consumers
→ provides an open and participative infrastructure
→ its main purpose is to consummate matches among users and facilitate the exchange of goods
or services in order to enable value creation
Platform structure: = complex value matrix (shift from a traditional linear value chain)
- Pipeline arrangement is transformed into a complex relationship in which producers, consumers
and the platform enter into a variable set of relationships
→ connecting and conducting interactions in which something of value is cocreated
- Value can be created, changed, exchanged or consumed
- Eliminate inefficient gatekeepers and so scale more efficiently
- Unlock new sources of value creation and supply of the market (increasing a new inventory of
services, goods,...)
- Data-based tools which create community feedback loops (instead of editors, managers,
supervisors)
- Platforms invent the firm (platform’s value is created by the community of users)
→ social influence and virality
→ consumer relationship management
→ no actual inventory
→ organizing external resources and engaging communities
- Diversity
- Traditional business management practices are changing
- Platform expertise as essential for business leadership
- Consummating matches among users
- Creating value by using resources which they don’t own
- Blurring business boundaries (e-commerce)
2
,Chapter 7: Openness
- Should platforms like Wikipedia be more closed to ensure better quality even if it can reduce the
value-creation potential of the platform?
- Closedness: rules which could discourage participation
- The more open a platform is, the more difficult to control
- Openness can also go into extremes, it is important to examine a case-by-case basis (Wikipedia
vs. Myspace)
- Behind a platform, two entities are responsible for its structure and operations: the firm which
manages the platform & directly interacts/ influences users and the firm that sponsors the
platform and retains legal control over it
→ the second is in control of the openness
- Joint venture model: a single firm manages the platform while a group of firms sponsors it (e.g.
orbitz travel reservations)
- Shared model: a group of firms manages the platform while another group sponsors it (e.g. Linux)
- Licensing model: a group of firms manages the platform while one firm sponsors it (e.g.
Microsoft Windows)
- Proprietary model: a single firm both manages and sponsors the platform (e.g. playstation)
Developer participation
3 types of developers:
1. Core developers: create core platform functions that provide value to platform participants
- Main job is to get the platform into the hands of users and deliver value through tools and
rules that make the core interaction easy
- Responsible for basic platform capabilities
- Internal platform management party
2. Extension developers: add features and value to the platform and enhance its functionality
- Outside parties
- Extract a portion of the value and profit from the benefits they offer
- To what extent can a platform be open to extension developers?
→ those who keep it open create an application programming interface
3. Data aggregators: enhance the matching function of the platform by adding data from multiple
sources
- Resell data about platform users to other companies for advertising purposes
- They can match up platform users with producers whose goods and services they could
find interesting
- Personal behavior is being monitored
What to open and what to own?
- Depends on the amount of value created by a particular extension app
- You don’t want to let an outside firm control a primary source of user value on your app
3
, - If particular functionality is reinvented and gains widespread acceptance by users, the manager of
the platform should acquire it and make it available through API (recognize broad applicability)
- Control user participation (producer openness: the right to freely add content to the platform)
→ objective is high quality content (maintenance of quality)
- Limiting openness through artful curation (screening and feedback)
→ human gatekeepers, moderators, user ratings
Openness over time:
- Employees have to provide content and curation if the platform is fully closed
- A forward-looking platform management team must design ways to evaluate the platform’s
openness level (develop algorithms to automate curation or to decentralize it)
- There has to be a balance (if the platform is too closed the partners may refuse to make platform
specific investments)
→ if the platform is too open, the extension developers might begin to insert themselves too
aggressively between the platform and its users
→ developers can even displace the platform itself and use its uses (SAP & ADP)
- Unique power and value of the platform lies in its ability to facilitate connections among
participants from outside the platform
3 kinds of openness decisions that managers face:
1. Regarding management/ sponsor participation
2. Developer participation
3. User participation
Nabisan: “Digital entrepreneurship: towards a digital technology perspective of entrepreneurship”
- Digital technologies have transformed the nature of entrepreneurial processes and outcomes as
well as ways in which you deal with economic uncertainty in the market
- Digital entrepreneurship: intersection of digital technologies and entrepreneurship
- Digital technologies have made entrepreneurial processes less bounded
→ fluid because the scope and value of products continues to evolve even after the idea has been
enacted
→ digital platforms infuse a degree of generativity (technology’s overall capacity to produce
unprompted change driven by large, varied and uncoordinated audiences)
→ less bounded in terms of temporal structure (business models can be quickly formed or
changed, different phases of development can happen simultaneously)
- Digitalization of products and services
- Breaking down processes between different phases of production → less predefinition in
entrepreneurial agency and where it is situated
→ allowed shared value creation
→ change in entrepreneurs beliefs and actions
→ who gets to participate?
4
DIGITAL INNOVATION & ENTREPRENEURSHIP READINGS 1
Chapter 1: Today 2
Chapter 7: Openness 3
Nabisan: “Digital entrepreneurship: towards a digital technology perspective of entrepreneurship” 4
Sahut: “The age of digital entrepreneurship” 6
Week 2: 8
Chapter 2: Network Effects - The Power of the Platform 8
Alstyne & Parker: “Digital Transformation Changes How Companies Create Value” 12
Gans & Stern: “Multiple Paths to Value: Test Two, Choose One” 13
Week 3 16
Chapter 3: Architecture: Principles for Designing a Successful Platform 16
Chapter 5: Launch - Chicken or egg? 8 ways to launch a successful platform 20
Chapter 6: Monetization - Capturing the Value Created by Network Effects 24
Kretschmer et al.: “Platform ecosystems as meta-organizations: Implications for platform strategies”
28
Week 5 30
Bourdeau: “Competing on freemium: Digital competition with network effects” 30
Cusumano: “The future of platforms” 33
Liptak: “Supreme Court Blocks Texas Law Regulating Social Media Platforms” 36
Van Alstyne: “The Rising Risk of Platform Regulation” 36
Suarez: “Dethroning an Established Platform” 37
Van Alstyne: “Pipelines, platforms, and the new rules of strategy” 38
Yu: “For Some Platforms, network effects are no match for local know-how” 40
Zhu: “Why some platforms thrive and others don’t” 41
Week 6 42
Chalmers et al.: “Artificial Intelligence and Entrepreneurship: Implications for Venture Creation in
the Fourth Industrial Revolution” 42
Gregory et al.: “The Role of Artificial Intelligence and Data Network Effects for Creating User
Value” 48
Levine & Jain: “How Network Effects Make AI Smarter” 53
Kircher: “OMG! What will happen when A.I. makes Buzzfeed Quizzes?” 54
Smith: “How TikTok Reads Your Mind” 54
Week 7 55
Agrawal et al.: “Chat GPT and How AI Disrupts Industries” 55
Baxter & Schlesinger: “Managing the Risks of Generative AI” 55
Cromwell et al.: “Discovering where ChatGPT can create value for your company” 57
Gibney: “Open-source language AI challenges Big Tech’s models” 59
Mollick: “ChatGPT is a tipping point for AI” 59
Mollic & Euchner: “The transformative potential of generative AI” 60
1
, Mollick & Mollick: “Using AI to implement effective teaching strategies in classrooms: five
strategies, including prompts” 62
Mollick & Mollick: “Assigning AI: 7 approaches for students with prompts” 64
Chapter 1: Today
- Markets change into a new platform business model that uses technology to connect organizations
through the power of the platform
- The platform radically changes the society at large as well as the economy
- The disruptive power of platforms is transformative in many different fields
- ⇒ the platform revolution
- Platform = a business based on enabling value-creating interactions between external producers
and consumers
→ provides an open and participative infrastructure
→ its main purpose is to consummate matches among users and facilitate the exchange of goods
or services in order to enable value creation
Platform structure: = complex value matrix (shift from a traditional linear value chain)
- Pipeline arrangement is transformed into a complex relationship in which producers, consumers
and the platform enter into a variable set of relationships
→ connecting and conducting interactions in which something of value is cocreated
- Value can be created, changed, exchanged or consumed
- Eliminate inefficient gatekeepers and so scale more efficiently
- Unlock new sources of value creation and supply of the market (increasing a new inventory of
services, goods,...)
- Data-based tools which create community feedback loops (instead of editors, managers,
supervisors)
- Platforms invent the firm (platform’s value is created by the community of users)
→ social influence and virality
→ consumer relationship management
→ no actual inventory
→ organizing external resources and engaging communities
- Diversity
- Traditional business management practices are changing
- Platform expertise as essential for business leadership
- Consummating matches among users
- Creating value by using resources which they don’t own
- Blurring business boundaries (e-commerce)
2
,Chapter 7: Openness
- Should platforms like Wikipedia be more closed to ensure better quality even if it can reduce the
value-creation potential of the platform?
- Closedness: rules which could discourage participation
- The more open a platform is, the more difficult to control
- Openness can also go into extremes, it is important to examine a case-by-case basis (Wikipedia
vs. Myspace)
- Behind a platform, two entities are responsible for its structure and operations: the firm which
manages the platform & directly interacts/ influences users and the firm that sponsors the
platform and retains legal control over it
→ the second is in control of the openness
- Joint venture model: a single firm manages the platform while a group of firms sponsors it (e.g.
orbitz travel reservations)
- Shared model: a group of firms manages the platform while another group sponsors it (e.g. Linux)
- Licensing model: a group of firms manages the platform while one firm sponsors it (e.g.
Microsoft Windows)
- Proprietary model: a single firm both manages and sponsors the platform (e.g. playstation)
Developer participation
3 types of developers:
1. Core developers: create core platform functions that provide value to platform participants
- Main job is to get the platform into the hands of users and deliver value through tools and
rules that make the core interaction easy
- Responsible for basic platform capabilities
- Internal platform management party
2. Extension developers: add features and value to the platform and enhance its functionality
- Outside parties
- Extract a portion of the value and profit from the benefits they offer
- To what extent can a platform be open to extension developers?
→ those who keep it open create an application programming interface
3. Data aggregators: enhance the matching function of the platform by adding data from multiple
sources
- Resell data about platform users to other companies for advertising purposes
- They can match up platform users with producers whose goods and services they could
find interesting
- Personal behavior is being monitored
What to open and what to own?
- Depends on the amount of value created by a particular extension app
- You don’t want to let an outside firm control a primary source of user value on your app
3
, - If particular functionality is reinvented and gains widespread acceptance by users, the manager of
the platform should acquire it and make it available through API (recognize broad applicability)
- Control user participation (producer openness: the right to freely add content to the platform)
→ objective is high quality content (maintenance of quality)
- Limiting openness through artful curation (screening and feedback)
→ human gatekeepers, moderators, user ratings
Openness over time:
- Employees have to provide content and curation if the platform is fully closed
- A forward-looking platform management team must design ways to evaluate the platform’s
openness level (develop algorithms to automate curation or to decentralize it)
- There has to be a balance (if the platform is too closed the partners may refuse to make platform
specific investments)
→ if the platform is too open, the extension developers might begin to insert themselves too
aggressively between the platform and its users
→ developers can even displace the platform itself and use its uses (SAP & ADP)
- Unique power and value of the platform lies in its ability to facilitate connections among
participants from outside the platform
3 kinds of openness decisions that managers face:
1. Regarding management/ sponsor participation
2. Developer participation
3. User participation
Nabisan: “Digital entrepreneurship: towards a digital technology perspective of entrepreneurship”
- Digital technologies have transformed the nature of entrepreneurial processes and outcomes as
well as ways in which you deal with economic uncertainty in the market
- Digital entrepreneurship: intersection of digital technologies and entrepreneurship
- Digital technologies have made entrepreneurial processes less bounded
→ fluid because the scope and value of products continues to evolve even after the idea has been
enacted
→ digital platforms infuse a degree of generativity (technology’s overall capacity to produce
unprompted change driven by large, varied and uncoordinated audiences)
→ less bounded in terms of temporal structure (business models can be quickly formed or
changed, different phases of development can happen simultaneously)
- Digitalization of products and services
- Breaking down processes between different phases of production → less predefinition in
entrepreneurial agency and where it is situated
→ allowed shared value creation
→ change in entrepreneurs beliefs and actions
→ who gets to participate?
4
